Executive Order Compliance for Federal Contractors (2025)

Beyond the FAR and specific contract clauses, federal contractors must comply with a body of Executive Orders (EOs) that impose employment, compensation, and non-discrimination requirements. These requirements are separate from and in addition to standard employment law — they are conditions of doing business with the federal government.

Many small contractors discover these requirements only when a compliance audit or complaint surfaces. Understanding your obligations in advance prevents violations that can result in contract suspension, debarment, and back pay assessments.

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The Core EO Framework for Federal Contractors

Executive Order 11246: Equal Employment Opportunity

Applies to: Federal contractors and subcontractors with contracts of $10,000 or more.

Requirement: Prohibits discrimination based on race, color, religion, sex, sexual orientation, gender identity, or national origin. Contractors must take affirmative action to ensure equal opportunity.

Affirmative Action Plans (AAPs) required if: You have 50 or more employees AND a contract of $50,000 or more.

AAP requirements:

• Annual written affirmative action plan for women and minorities
• Availability analysis comparing your workforce to the relevant labor market
• Goals and timetables where underutilization exists
• Program implementation steps
• Internal audit and reporting system

AAPs are not submitted to OFCCP unless audited — but must be available for inspection by the OFCCP (Office of Federal Contract Compliance Programs) within 30 days of request.

OFCCP audits: OFCCP conducts supply and service compliance evaluations (desk audits → on-site reviews). Large companies are audited periodically; small businesses are less frequently targeted but not immune.

Executive Order 13672: LGBT Non-Discrimination

Signed in 2014, extended E.O. 11246 protections to include sexual orientation and gender identity. The protected categories under the combined framework are: race, color, religion, sex, sexual orientation, gender identity, national origin.

Executive Order 13658 / 14026: Minimum Wage on Federal Contracts

E.O. 14026 (Biden, April 2021) established a minimum wage for federal contractor employees:

• $17.75 per hour (effective January 1, 2025; adjusted annually based on CPI)
• Applies to workers performing work covered by the contract

Who is covered:

• Workers on new federal contracts and contract renewals/extensions
• Service workers under the Service Contract Act
• Construction workers under the Davis-Bacon Act
• Workers on concessions contracts

Who may not be covered:

• Workers on contracts for materials, supplies, or articles
• Workers on contracts with the exception for off-site manufacturing

The Trump administration issued E.O. 14184 in January 2025, which rescinded E.O. 14026 for new contracts awarded after the rescission date. Check the current status of applicable wage orders for your specific contracts — existing contracts with E.O. 14026 clauses continue to require the higher wage through their base period and options.

Executive Order 13706: Paid Sick Leave

Applies to: Covered service, construction, and concession contracts issued after January 1, 2017.

Requirement: Workers must accrue at least 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered contract, up to 56 hours (7 days) per year.

Sick leave can be used for the worker's own illness, preventive care, or caring for a family member, or for domestic violence situations.

Carry-over: Unused leave carries over year to year; you are not required to pay it out at termination unless state law requires otherwise.

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VETS-4212 Reporting (VEVRAA)

Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA) requires federal contractors to:

• Take affirmative action to employ and advance in employment "protected veterans" (disabled veterans, recently separated veterans, active duty wartime veterans, campaign badge veterans)
• File an annual VETS-4212 report with the Department of Labor

Applies to: Contractors with a federal contract of $150,000 or more.

VETS-4212 filing:

• Due annually by September 30
• Filed electronically at vets.dol.gov
• Reports the total number of employees, total number of protected veterans hired, the contractor's employment goal for protected veterans, and current year hiring

Failure to file VETS-4212 reports can result in OFCCP complaints and is a violation of VEVRAA.

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Section 503 (Rehabilitation Act): Disability Affirmative Action

Applies to: Federal contractors with contracts of $15,000 or more.

Requirement: Take affirmative action to hire and advance qualified individuals with disabilities.

Written AAP required if: 50 or more employees and $50,000+ contract (same threshold as E.O. 11246).

Section 503 AAP requirements:

• Utilization goal: 7% of each job group should be individuals with disabilities (SIC benchmark)
• Data collection on self-identified disabilities (voluntary self-identification invitation at hire and annually)
• Review of personnel processes for barrier to employment for people with disabilities

Self-identification requirement: At hire and annually, contractors must invite employees to voluntarily self-identify as having a disability using the form approved by OFCCP. This is mandatory — failing to send the invitation is a compliance violation even if no employees have disabilities.

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Pay Transparency / Equal Pay Requirements

E.O. 13665 (Pay Transparency): Prohibits contractors from retaliating against employees or applicants who inquire about, discuss, or disclose compensation. Applicable to all federal contractors covered by E.O. 11246.

What you must do: Include a pay transparency non-retaliation policy in your employee handbook. Post the OFCCP "Pay Transparency Nondiscrimination Provision" poster at all workplaces and include it in contractor solicitations.

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How OFCCP Enforces These Requirements

The Office of Federal Contract Compliance Programs enforces E.O. 11246, Section 503, and VEVRAA through:

• Compliance evaluations (audits): Desk audits, on-site reviews, focused reviews
• Complaint investigations: Employee complaints of discrimination trigger investigations
• Pre-award surveys: For very large contracts, OFCCP may conduct pre-award compliance review

Consequences of non-compliance:

• Conciliation agreements (corrective action plans)
• Back pay and lost benefit awards to affected employees
• Contract cancellation
• Debarment (listed on the EPLS, excluded from federal contracting)

Timing risk: OFCCP enforcement is complaint-driven and audit-selected. A single employee complaint can trigger a full compliance audit of all your OFCCP obligations.

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OFCCP Compliance Basics

Recordkeeping: Retain applicant flow data (race, sex, disability, veteran status for each applicant and hire) for at least 2 years (3 years for companies with 150+ employees or $150K+ contracts).

Employment advertising: Include "Equal Opportunity Employer M/F/Disability/Veteran" in job postings. This is not optional; it is an OFCCP requirement.

Subcontractor flow-down: These requirements flow down to subcontractors — include EO clauses in your subcontracts as required.

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Key Takeaways

• E.O. 11246 prohibits discrimination and requires AAPs for contractors with 50+ employees and $50K+ contracts — AAPs must be written, maintained, and available for OFCCP inspection.
• Federal contractor minimum wage (currently $17.75/hr for contracts subject to E.O. 14026) applies to workers performing work on covered contracts — check which E.O. governs your specific contract.
• E.O. 13706 paid sick leave requires 1 hour per 30 hours worked, up to 56 hours annually, for covered contract workers.
• VETS-4212 filing is due September 30 annually for contractors with $150K+ contracts — report protected veteran hiring data at vets.dol.gov.
• Section 503 AAPs include a 7% disability utilization goal per job group and mandatory annual self-identification invitations.
• OFCCP enforcement is triggered by complaints and compliance evaluations — document your EO compliance thoroughly and maintain records for 2–3 years.

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